5 Common Money Mistakes We Make In Our 20s and 30s
November 10, 2021
As soon as we start earning our salary, we make some radical financial and monetary decisions, which end up being mistakes in the long run. There are quite a few reasons for this, but one that is commonly attributed to problems like these is low financial literacy. Our schools, colleges, and a number of years of formal education may prepare us to face the real world, but more often than not, it leaves us completely clueless about the financial world. This is why we have listed down 5 common money mistakes we make in our 20s and 30s, so you can avoid these!
- Frivolous Spending- The indescribable joy of the first salary, the rush when your account shows salary credited, we understand how this can be an invitation to spend it all, and that’s exactly what we do in our 20s. Living beyond our means won’t get us to financial freedom anytime soon, and living paycheck to paycheck is certainly not the way to go. Since we are not taught the basics of money management from a young age, these skills take time to develop in our adulthood and may affect us in the long run, if we are not savvy with our expenses!
- Not Having Financial Goals- Like with any destination, it is easy to get lost amidst the confusion if our journey is not mapped. Having a financial goal is really important because if we don’t have a financial plan, our expenses will be unhinged and you will be completely clueless when an emergency hits. We know the future is a long shot, and you might feel that there is time, but every year you don’t categorize your goals, you lose a layer of financial security. Start with short-term goals, like saving an x amount, or opening up a retirement fund, just the thought is a wise investment in your future!
- Credit Cards- Oh the ominous credit card! When we are in our early 20s and 30s, maintaining an image (and over the top credit card limit!) is all the rage. This habit is extremely harmful especially in your 20s if you have education loans and other debts pending. Plastic is drastic, this rings true for that credit card lingering in your wallet waiting to add exponential debt with its towering interest rates and deceptive rewards. However, if you are of the very disciplined ones, you might think about owning 1 credit card.
- Not Having An Emergency Fund- Usually, having any money saved at all at the end of the month quickly translates to orders from Zomato and that red dress from Zara- although indulgences are good once, in a while, you are completely going bare if you don’t have an emergency fund. The pandemic has taught us bitterly that job security and financial wellness may all well be transient and that fortune favors the prepared. Not having an emergency fund will be crippling if any sort of financial or health emergency arises, you will be on shaky ground!
- My Friend Told Me To Invest In..- Beware of this! We understand that friendships are important, but take everything with a grain of salt. We have all been guilty of falling trap of conjecture and investing our money in a risky stock which we would not have otherwise. Falling trap to what others are saying is a common problem, but it can be extremely pricey when it involves literal money! Investing is a great tool for your money to work for you, but make sure that you do your own research and not fall into so-called trends and end up in grave financial danger!